Income inequality

On July 23, 2016, we discontinued our forums. We ask our members to please join us in our new community site, The Hartmann Report. Please note that you will have to register a new account on The Hartmann Report.

re:

by MikeDiehl

Sep. 14, 2010 12:09 pm

I'm a relative newbie to this site. Posted the message below on a "blog" but it might be more appropriate here. (I'll learn....)

I caught only a little of today's show, but my ears perked up when the subject of taxes for high-income earners was discussed. I'd not previously heard the proposition that raising taxes for small business owners benefits the economy, and boosts employment, as people tend to invest more in their business when tax rates are higher. Makes eminent sense.

Speaking of highly paid individuals, a friend sent a link to a Bloomberg piece reporting how wealthy folks tend to save "excess" income, rather than spend it (boosting the economy, as Republicans maintain). That, too, makes visceral sense; saving is how the rich get richer, and that certainly is the trend we've witnessed in this country for the past 30 or 40 years. Here's the piece:

On a related note, an editorial in Saturday's LA Times (first link below) cites a CIA report (second) that documents that, while 41 countries have greater income inequality than the U.S., many more do not. Of course in that first bunch are sub-Saharan fiefdoms, banana republics, teeny island natons and other countries we would not, I think, aspire to emulate in this, or any other regard. Doing better than us are all the first-world industrialized countries, and topping the list (i.e., the least inequality) are Norway and Sweden.

It boggles my mind that the majority of Americans have an inkling that their lot in life is getting worse, but refuse to understand who's responsible -- and vote repeatedly against their own best interests.

Thanks, Thom, for your excellent work spreading that, and many other Good Words....

Comments

re: Income inequality

by polycarp2

Sep. 14, 2010 12:43 pm

Mike Diehl wrote:" It boggles my mind that the majority of Americans have an inkling that their lot in life is getting worse, but refuse to understand who's responsible -- and vote repeatedly against their own best interests"

re: Income inequality

by Cheesebone

Sep. 14, 2010 1:27 pm

Sweden and Norway are "unfair" to bring up, to a degree though, especially Norway. Primarily because Norway's entire population is just under 5 million people. The whole country. That's like the population of the city of Los Angeles. Spread over an entire country.

But Norway is also extremely rich in natural resources, they can export a much larger percentage of these resources VS their overall population than basically any other country on the planet. They are "rich" and "equal" IN SPITE of government policies there... they can afford all of the programs that make them function the way they do because their population is so small in relation to what they're capable of exporting.

It is not government policy that makes them better off, there. It's just that they can afford it.

I did manage to catch the bit of the program today where Thom mentioned that tax decreases result in lower overall wages, and that higher taxes result in higher overall wages. I don't see how this is beneficial to anyone EXCEPT the government. The arguement was that if taxes decrease, then an employer can pay LESS gross to an an employee and still let them take home the same amount of money. Which is true. This benefits the employer and has no adverse effect on the employee whatsoever. The other side of it says that if taxes increase, wages have to increase as well, so as to maintain the take home pay from the employee. But this comes at a further expense to the employer, and STILL has no beneficial effect on the employee. So the productivity stays the same, the work being accomplished doesn't change, but it now costs the employer more money per employee to achieve what was being achieved before. Assuming that the business made identical transactions (0% gain or loss in gross revenue) in the year before the tax hike, and the year AFTER the tax hike, this means that the business owner made LESS money for the EXACT SAME level of productivity, while the employees saw no change at all.

So tell me how this benefits anyone?

It's like putting a marshmallow in a microwave. It grows to twice the size, and therefore LOOKS like it's more filling. But eating the unmicrowaved marshmallow is just as filling as the microwaved one, in reality. It's just that it costs you extra money through your electric bill to turn the microwave on and "inflate" the mallow in the first place.

Just because the employer has to inflate the gross wages of the employee doesn't mean that it actually benefits the the employee if their take-home pay stays the same. All it means is that the government gets more money that someone else rightfully earned. And now, the employer, has LESS money than before, which means they either have to make lifestyle changes (spend less, save less) or cut business expenses, or keep expenses the same and force more productivity by the employees in order to maintain the lifestyle that they previously achieved, and rightfully earned.

re: Income inequality

by rysl

Sep. 14, 2010 2:44 pm

Cheesebone,

I missed part of where Thom was explaining this, so this might not be entirely correct, but it sound like you would agree that the employee is relatively insulated from taxes on the employer. This goes in both directions, so that when tax rates are reduced (forcing the gov't to borrow money or reduce services), it results in lower wages.

Most enlightening IMO was the realization that people, to avoid entering the highest tax bracket, would invest in their business infrastructue, hire new workers, give their current workers raises, more benifits, or more time off.

Money is like water, it flows through the path of least resistance, but it can also be harnessed to build and strengthen a society.

re: Income inequality

by tmoney13

Sep. 14, 2010 3:17 pm

Mike Diehl: It boggles my mind that the majority of Americans have an inkling that their lot in life is getting worse, but refuse to understand who's responsible -- and vote repeatedly against their own best interests. - I think you are assuming a lot here. I don't know about the majority of Americans, and I can't say that my life is getting worse, and if it was I don't think I would lay blame at the same feet that you would. Also, I think who people vote for may be more than just an economic issue. For me personally, I would sacrifice some economic gain to acquire greater freedom....but that is just me. I think, in fact, most people do vote for who they think is going to act in their best interests, unfortunately we operate under a one party with two heads system so no real change is ever going to come about.

I think the inequality arguement is a little misleading, as is GDP or GDP/capita which is a subject that Polycarp2 and I have discussed on a separate thread regarding the German economy. Those two things when taken separately don't necessarily tell the whole story. GDP/capita tells you how well off (on average) a country is doing compared to others, and inequality deals with the spread or distribution of wealth, which I tend to think is more a political issue rather than an actual economic one, I am sure people will disagree. In an oversimplified and absurd analogy imagine two countries, in which Country A has a populace that get between $100k-$2bn/yr and Country B where everyone earns $2k to $3k/yr. Obiviously Country B is more equal but who would want to live on a max of $3k when you could live in Country A at a minimum for $100k?

Cheesebone, in regards to the natural resources issue, I am not sure that it really bears out. Yes, Norway has a sparce population and lots of natural resources, but there a many countries that have fewer resources but do very well for themselves too, in GDP/capita terms. I think Norway may be the exception more than the rule.

Also I am pretty sure that the tax burden usually falls disproportionately on workers, so the relationship that you describe may not be exactly correct. I will check my econ books and get back to you

re: Income inequality

by Cheesebone

Sep. 14, 2010 4:20 pm

I was basically saying that Norway has been able to afford the fact that it's government spends over 40% of it's GDP because of their rich resources and sparse population. They are one of the few countries that can actually survive on such high government consumption. The government doesn't need to reduce spending there because the country is capable or supporting it. As time goes on and the population increases there, either production will have to increase in parallel to the population to allow government spending to increase to fund the same programs to the extent that they are currently funded, or cuts will have to be made in the gov't budget.

There are absolutely other countries with far less of a resource/population ratio who have been succesful, but they will only be able to maintain that success so long as government doesn't get too greedy or offer too many programs. So while gov't spends 40% GDP of Norway, other countries would be absolutely crippled with that same figure, simply because there is not enough potential production & revenue VS the population.

Rysl - what I'm saying is that lower GROSS wages do not effect an employee as long as take-home wages remain constant. If the government lowers the overall tax burden, then an employer who used to pay 1,500 a week so his employee can take home 1,000 a week, now only might have to pay, say, 1,300 a week for the employee to take home the same 1,000 a week. The employee sees no change, and the employer saves 200 a week. That's over 10 grand a year, in this case.

So, maybe on paper, the national average wage may drop in the event of a tax cut, but actual take-home wages can still remain at current levels. And the money people take home is the money they spend (and save). And, in many small-businesses with tighter-knit employees and "family oriented" environments, tax cuts absolutely can and often do lead to gross and take-home wage increases.

Which of these would make more sense to you:

You walk into your bosses office and he says "Good news - the government just made it more expensive for me to run this business, so now I have an incentive to give everyone a raise"

OR

You walk into your bosses office and he says "Good news - the government just made it less expensive for me to run this business, so now I have an incentive to give everyone a raise"

re: Income inequality

by douglaslee

Sep. 15, 2010 4:46 am

Norway is now running a surplus, and projected surplus for the next 75 years, including all infrastructure maintenance and improvements, all social costs [medical expenses for national health, and expenses for national retirement]. Their sovereign wealth fund is also invested in international equities. They are not cutting taxes, just maintaining and investing in a sustainable country.

The wage increase, when the employee has a fixed 30 year mortgage, means their cost of living is less, so they either spend more or save more. Spending more benefits other businesses created increased demand. Saving more benefits the employee by securing a future retirement.

re: Income inequality

by meljomur

Sep. 15, 2010 6:40 am

We had dinner last night with a Norwegian friend of ours. We always get into great political discussions. I asked him about the significant unemployment benefits in Norway. And he replied, 'well they aren't really that great'. 'It maxes out at the equivalent of $85,000/yr'.

My husband and I were just laughing. Can you imagine being able to claim $85,000/yr. in unemployment benefits for 2 years? Yet Norway only has a 4% unemployment rate.

re: Income inequality

by Cheesebone

Sep. 15, 2010 8:14 am

Again, you need to see the fundamentals. It is not Norways spending that allows them to have these benefits, it is Norways PRODUCTION and export of resources that allows them to do this. The reason they can afford to fund these programs through government on such a grand scale is quite simply because they are uniquely (and favorably) unbalanced when it comes to their resources VS their overall population.

Like I said, the entire country of Norway has roughly the same population as the city of Los Angeles. Spreading the revenue generated by the resources available in Norway amongst such a small population will OBVIOUSLY create a much more wealthy population. The reason their unemployment rate is low is simply because there are enough productive jobs there to employ those searching for work.

I simply don't understand how so many people think that spending is what grows an economy... it's so COMPLETELY backwards. Spending is what happens BECAUSE an economy grows, the ability to spend is the RESULT of economic growth through production, not consumption. The logic that spending creates economic growth is like saying that the reason food grows is because we eat it. No, we grow food FIRST because we need to eat it to live. Simply eating food doesn't create more food.

re: Income inequality

by meljomur

Sep. 15, 2010 8:28 am

I don't think your argument holds much ground there Cheesie.

For example Saudi Arabia has MUCH more oil than Norway, and a rather small population (16 million). But having been to Saudi Arabia, unless you are a member of the royal family, its a s**thole! Not much in the way of the financial benefits spreading across the masses.

Norway, on the other hand,significantly taxes the oil companies which drill there. Their biggest oil company is state owned, and much of the revenue goes back into the ENTIRE nation, not just in the pockets of a few.

I am not sure I would compare Norway to LA either. You don't see many Norwegians living in cardboard boxes and out of shopping carts.

Besides, Norwegians pay one of the highest tax rates in the world. This is another reason they have such a high overall standard of living.

re: Income inequality

by MarkRoger

Sep. 15, 2010 8:43 am

It seems to me that, in Norway, they have made a commitment to making sure that a substantial portion of the fruits of their production goes toward taking care of their people (including workers). In America, a disproportionate amount of the fruits of production goes straight to the top resulting in a relatively low quality of life for the average American (compared to in Norway). Of course spending can't be done without production, but when that spending is left solely to those at the top, financially, American workers get left out. Our democratic government (when/if restored to truly representative) is average Americans' best method of uniting against the financial domination by elites in this country.

re: Income inequality

Yes, but again, LOOK AT THE FUNDAMENTALS. Do some math for a minute, look at 2008 numbers for example. Norway exported about 176 Billion dollars worth. The US exported about 1 Trillion dollars.

Norway has 5 million people. The US has 300 million people. Norway's Exports VS their population ALONE come out to roughly $35,000 per person. By comparison, The US figure comes out to about $3,300 per person. Norways export revenue per person is over 10 times that of the US. THAT is why they can afford these programs that "take care of their people". They are ridiculously rich in resources in comparison to their population size.

Many of their exports include Gas, Oil, and Fish, which make perfect sense because such a huge percentage of their country is ocean coastline in the first place. This is also why they have been able to use hydroelectric power so efficiently, becasue such a massive percentage of their counrty is right on the ocean. They simply have a lucky location, that's all.

Upwards of 45% of their exports are from Oil and Gas alone! Norway has a massive amount of offshore and deep-water drilling rigs producing over 2 and a half million barrels a day of oil for them.

If the left got their way and the earth just stopped using oil and gas for fuel for transportation, we all went electric or whatever, do you think Norway would still be able to afford these programs at the level they currently enjoy? Hell no! It would take a HUGE chunk out of what they use as fuel for their own government and economy. Their surpluses would vanish ridiculously quickly if spending was kept at the current levels.

Put this in even more amazing terms - as small of a population as Norway has, they are the worlds 3rd largest exporter of natural gas and 7th largest exporter of petroleum petroleum. And these figures go back to only 5 million people. That means that 0.083% of the worlds population live in a country that is the 3rd and 7th largest exporter of the most demanded resources on the planet.

Again, these people are not wealthy becuase their government spends so much money. They are wealthy because of their fundamentals and willingness to be productive based on their fortunate location. They can simply AFFORD all of this government spending. These policies do not, cannot, and will not have the same results with a muge majority of countries on the earth.

And comparing Saudi Arabia's economic and governmental policies to the USA's policies is definltely NOT comparing apples to apples. Norway has many more resources than just oil, as well, they are the 2nd largest exporter of fish & seafood next to China, for starters.

re: Income inequality

by tmoney13

Sep. 15, 2010 10:09 am

Cheesebone: I was basically saying that Norway has been able to afford the fact that it's government spends over 40% of it's GDP because of their rich resources and sparse population. They are one of the few countries that can actually survive on such high government consumption. - I agree 100%. They are a bit unique for the reasons you have laid out. Going back to the original post about income inequality, having high income inequality isn't necessarily a "bad" thing. Norway because of its situation is capable of having both high GDP and better income distribution, but that would not necessarily be attainable for other countries as you have mentioned. The original poster appears to want to frame the argument as "the US has rather high income inequality in comparison to much of the rest of the developed world, what is wrong with some people that they vote for Republicans who want to lessen the (alreday progressive) tax burden ". My arguement to that is that income inequality doesn't tell the whole story, as I laid out in post #4.

Remove Norway's oil from that...which is what actually occurs,, and the U.S. production per person is nearly double Norways.....in the U.S., $180,000 per family of four.

Probably many living on $12,000 per year isn't very equitable. Our poverty rates reflect that. I don't personally know any family of four earning $180,000 which would be an equal share of the annual national production of wealth.. "Equitable" is a sum beneath "equal"...and probably isn't a bare subsistence income..

Germany's wealth production per person is way beneath ours...yet German union scale for auto workers is $60 an hour..ours $30. Ditto Denmark's production...and their min. wage is more than double ours.

An explanation tof Norway's social safety net and income equitability...., that makes sense...., would be worth considering. Population size is irrelevant, ..what is relevant is the amount of wealth generated per person. In the U.S., $180,000 per family of four...$46,000+ per person. That includes babies who produce nothing. ..

re: Income inequality

by tmoney13

Sep. 15, 2010 2:47 pm

Polycarp2, what would be the difference if the oil revenues were distributed and then taxed vs. putting the money in a soveriegn wealth fund? Essentially it goes to fund the same things doesn't it? Infrastructure, social programs, and the like?

re: Income inequality

by polycarp2

Sep. 15, 2010 3:05 pm

Nope. The Sovereign Wealth Fund...oil revenues.... isn't spent. Norway, like all nations, finances infrastructure, etc. by issuing government bonds. It's cheaper to pay interest on the bonds than to give up earnings in the Sovereign Wealth Fund. Care to buy some?

re: Income inequality

Yep. It isn't used to increase general living standards nor to pay for social programs. Though its counted as "production per person", it doesn't have that effect in the real economy. It isn't spent.

The production per person that remains is lower than the production per person in the U.S....and the quality of life in Norway is higher for the majority. It's a matter of how the national pie...the income...is distributed.

The Soverign Wealth Fund is separate from the economy.

The Norwegian unemployment rate, by the way, is under 4%. Incomes are sufficient to buy production. There isn't a whole lot of excessive income being withdrawn from the economy and disappeared into financial paper..

Income is distributed more equitably in wages and social programs. The national income (excluding oil) is spent. privately and publicly. It remains within the economy...The Sovereign Wealth Fund is outside of that. It has no effect on the economy....just a giant piggy bank.

re: Income inequality

GDP figures are not an accurate measurement in this case though, GDP for the US over the last year has shown growth averages of about 4% - you think that our REAL economy has grown 4%?

Back to oil again, Norway produces more than 1 barrel of oil for every 2 people in their country every day. (2.44 million barrels VS 4.8 million people in 2008)

In the same 2008 figures, the US produces 8.5 million barrels a day, which amounts to just under 1 barrel for every 35 people in the US. So yes, the US does produce more oil than Norway, but nowhere NEAR the same amount per person as Norway. And again, lets remember that the US is a huge CONSUMER of oil, the largest on the planet in fact. So the oil that we do produce, we tend to consume ourselves and very little of it gets exported, which helps US citizens by lowering the prices of petroleum based products. But these savings-per-person figures are DWARFED by the profits-per-person generated by Norways exports because of the oil they produce, they don't need hardly any of it. it's almost all exesss and therefore an export. As with Natural Gas. And with every other natural resource they export. Because they produce FAR FAR more than they consume, because their population doesn't need it.

And, as I mentioned, Oil & Natural gas amount to 45% of their exports. That still leaves the other 55%. So assuming you cut oil AND natural gas (which as far as I know, does NOT add any money to the Sovereign Wealth Fund, but for arguements sake I'll keep it lumped in.) out of the equasion, that brings their export revenue per person down to about $19,000. For every man, woman, and child there. Which is still over 6 times as much as what we have here in the US.

The fact that 80% of their oil prodction does fund the Soverign Wealth Fund is something I didn't consider until you mentioned it, and so you definitely have a valid statement there, but it doesn't provide nearly enough weight to drag the scales down to bolster the whole argument that it's Norway's taxes and government spending that is the reason they are so wealthy in the first place.

If there is one thing that will become more of an issue, it's the fact that Norway is finding it harder and harder to locate oil to produce now. The sovereign wealth fund's investments will need to start showing returns or they will have problems on the horizon, especially considering that their energy consumption per unit of GDP is the 2nd highest of any modern developed country right now.

re: Income inequality

by polycarp2

Sep. 15, 2010 4:27 pm

And given that the U.S. produces $180,000+ per family of four per year...$46,000 for every man, woman and child....why is it that so many can't even afford a $100 dental visit? In Norway, they see a dentist..

I'll ask this question again......:

Norway's fairly recently discovered oil has its sales invested in a Sovereign Wealth Fund that can now pay off fhe debts of its neighbors .....and have cash left over.(that includes, by the way, profits from domestic sales)

The U.S. had even more oil...pumped for over a century....and is heading for national bankruptcy.. How is that?.

re: Income inequality

by tmoney13

Sep. 16, 2010 5:52 am

Polycarp2: The U.S. had even more oil...pumped for over a century....and is heading for national bankruptcy.. How is that?. - Becasue we spent it. That is pretty much the big answer, do you thing it is cheap to try to maintain a global military Empire? What I do find interesting Poly, is your ready use of GDP as an indicator of succes for Norway, but your outright refusal (in fact you called GDP BS) in the German economy post to recognize it as a useful measure even though the that was what the original article was about. Some consistency seems to be in order.

Meljomur: Whether we discuss Germany or Norway or some other nation which is economically head and shoulders above the USA, conservatives will find some excuse why it just isn't so grand there. - I think we covered the German myth already, our GDP per capita is about 33% better than theirs so lets not keep perpetuating falsehoods.

Meljomur: When you can somehow convince more than half your adult population to vote against their own best interest. It does speak volumes about the general, American public. - specifically what vote against what interest? To what issue are you refering?

Cheesebone, you had mentioned income taxes and the effect on the worker and my initial assumption was that the burden would fall most heavily on the worker. I said that I would look it up in my economics book and I have done so. The real answer is that in the labor market the burden of income taxes falls on the side (either supply which is labor, or demand which is companies hiring labor) that is less elastic. Generally speaking (and specifically now) people need to work more than companies need to hire, so the supply of labor tends to be less elastic, therefore the burden of an income tax increase will generally fall on the worker more heavily than the company.

re: Income inequality

by Cheesebone

Sep. 16, 2010 6:13 am

Again, Poly, you are using GDP numbers as reference to the US, I was using EXPORT NUMBERS only for Norway.

The same calculations for "production" based on GDP figures for Norway VS their population, using 2009 figures, is 456 Billion USD across 5 million people, which comes out to $91,200 per person, or over $360,000 per family of four.

And you're right tmoney, people do need work more than companies need to hire, primarily because we are such a service-sector based economy right now and we consume FAR more than we produce. 70-80% of our GDP is consumer spending, we import way too many goods and this has created a lack of jobs in our productive sector.

re: Income inequality

by polycarp2

Sep. 16, 2010 7:33 am

And again Cheesbone...the production per person in Norway, when oil is removed from the equation (all oil export income goes into a Sovereign Wealth Fund...not the economy) ...is below that of the U.S....and the quality of life is higher..

Just as it is in most of Western Europe and Sweden.

Min. wage in Denmark is $16 an hour...and they proouce less per person than we do.. The national wealth is distributed differently.

The U.S. produces $180.000 per each family of four...annually....and poverty is killing people.,..So much wealth is extracted annually from the economy and thrown into financial paper, the economy is going into total economic meltldown.

At some point in time, even conservatives are going to have to face what is actually so. They'll probably face it by calling on the army to maintain order...and be applauded by "liberals" for doing so.

About all you're doing is explaining how a dysfunctional system works...without addressing the dysfunctionality.

A successful economy is nothing more than the production and distribution of required goods and services. We are failing miserably. Over 40 million are in poverty. The figure is rising. Cutting back on the production of goods/services makes sense in a dysfunctional system of rising poverty. In a functional world, it doesn't.

re: Income inequality

How can you call GDP "production" though? You know better than that...

Lets's just assume that 100% of Norways oil revenues go towards the Sovereign Wealth fund. (Which they do not, it's closer to 80% from what I'm reading, but still).

Let's also just forget the natural gas exports, and grossly inflate the oil revenue figures to 50% of the nations export revenue. (When in reality Oil AND gas make up about 45% of the total export revenue, which would be roughly 15% of the total GDP of Norway).

In 2009 Norways exports were about 130 Billion USD and their GDP was about 460 Billion. So if we cut half of the exports out of it (75 billion, assuming oil alone accounts for 50% of their exports), that would bring the GDP to 385 Billion USD. 385 billion across 5 million people is $77,000 per person, or over $300,000 a year for a family of 4.

I'm really having trouble understanding the figures you're giving me because when I do the math, it doesn't add up, even if I ridiculously stack the deck in favor of your argument. I'm not trying to be snotty here but I just don't comprehend how you state that Norway's production per person (whether in export or GDP form) is lower than the US when you take oil out of the equation. The ONLY way I can make that work is if I compare apples to oranges, and that would be if I spread 50% of Norways's 2009 export revenue across their population and it would equal $15,000 per person, VS USA's ENTIRE GDP across their population, which is $45,000 per person. But again, that's not a fair comparison at all.

Another good thing to look at is their exports VS GDP in general, in 2009 (which was a very weak export year for Norway when compared to 2008), $130 billion in exports to 460 billion in GDP = Norway's exports were about 28-29% of their GDP. If we take HALF of that our for oil, then their exports were about 14-15%.

If we include all of USA's exports, $1 trillion, compared to their GDP of $14 trillion, is just over 7%. Which is a quarter of Norways ratio, and only half of their ratio if we assume that 50% of their exports "don't count".

re: Income inequality

by polycarp2

Sep. 18, 2010 8:43 am

Cheesebone wrote: In 2009 Norways exports were about 130 Billion USD and their GDP was about 460 Billion. So if we cut half of the exports out of it (75 billion, assuming oil alone accounts for 50% of their exports), that would bring the GDP to 385 Billion USD. 385 billion across 5 million people is $77,000 per person, or over $300,000 a year for a family of 4.

poly replies: Your dispute on the figures isn't with me...it's with the CIA. They provided the data. Perhaps you should contact your local Central Intelligence Agency office and inform them of their horrendous errors.

Mel asks: Why they want to keep the US down is beyond me. One does wonder what the ulterior motive is?

poly replies: It's the same as any economic royalty. Capturing as much of the national pie for themselves as they possibly can. A whole new economic school has been established to promote and justify it. The Chicago School of Economics embraced by every Pres. beginning with Reagan up to the present one.

We are currently living the solutions of economic royalists to their problems. Lowered wages, outsourcing as national policy. dismantling of social programs, lowered taxes on themselves, and capturing the levers of government to suit their own interests.,The meltdown on Main Street is the solution to their problems. Enjoy.

The financial bonanza is being invested elsewhere for greater returns. China, Brazil, S.E. Asia..and derivative plays on global bond markets. A return to Increased activity in oil futures is in the cards. with increased China/India demand. .

Solutions for economic meltdowns have been known and proven for over 3/4 of a century....and contradict the interests of the power brokers....the new economic royalty.controllng the levers of government...

The U.S. economy is being mined for every last penney at an acceleratiing rate for a faster increase in capital accumulation elsewhere. Most conservatives, hung up on Chicago School ideology, can't see that and probably won't until they, themselves, are impoverished..They'll probably blame liberals.

re: Income inequality

by Cheesebone

Sep. 18, 2010 10:54 am

I see those charts, but again, this doesn't change the fact that these figures are still based on GDP figures, which you and I both know are NOT an accurate representation of what's really happening here in the US.

Our economy is comprised VERY heavily by spending borrowed money to consume items manufactured abroad. Not only are we not producing things to nearly the extent we need to, but the things we ARE buying are being bought with money that was lent to us by the people who produced them in the first place. You understand better than anyone else here, from what I can see how damaging that is to an economy, and that this "growth" is not REAL economic growth, but more of a cancerous growth consuming our economy.

And, again, GDP (PPP) is admittedly a very innacurate representation of the fundamentals.

At the end of the day I think this all falls on the fact that Norway simply has a very "lucky" location and when combined with it's small population and abundance of natural resources, these factors combine to allow for the high levels of gov't spending and programs.

Picture if California was it's own country with the whole population of LA spread within it's borders, and that was all that lived there. On top of all of it's oceanfront borders, providing ridiculous amounts of fishing revenue for it's people, it also has the ability to generate tremendous amounts of hydroelectric power. Lets also assume that it was sitting on Huge amounts of oil and natural gas reserves as well. How do you think California would look in comparison to the rest of the US? The standard of living there would be fantastic, most likely, and they would be able to afford more social-based programs.

Don't get me wrong, I absolutely believe that ANY country can afford socialised health care and benefits. But it's rare that a country can provide GOOD examples of these programs with any kind of sustainability. We in the US simply do no thave enough wealth here to fund modern health care for 300 million people, especially when the government squanders so much of our tax dollars on things like this ridiculous war and stimulus programs and bank bailouts and the like..

re: Income inequality

As noted before, the oil revenues are placed in a Sovereign Wealth Fund...they aren't spent within the general economy..

Imports reflect the exports of other areas of the economy. Trade balances from oil revenues aren't utilized for that purpose. Take it up with the CIA. Their figures, not mine.

Incomes of other nation's per capita are way, way lower than ours...yet somehow, the quality of lives of their citizens are way higher.

However, their economies aren't being mined to extract as much capital as possible...to be invested elsewhere. The "creative destruction" of their economies to raise capital for investment elsewhere, with quicker returns.isn't allowed..Their own power broker elites are working to reverse that.

Our current meltdown of Main Street is a reflection of that. It's the solution for economic royalist problems. Don't expect it to be reversed..

re: Income inequality

Even if there is an excessive gap between the top 1% and those at the bottom, what reason is there to believe that anyone's proposed remedy would make things better?

If you increase the minimum wage, it pushes up prices for everyone, plus makes it just a little more difficult to get hired, so every job-seeker and non-wage-earner is made worse off.

What are the great miracle remedies people fantasize that Norway and Germany have done which allegedly makes their economy superior and would turn the U.S. into the paradise they hallucinate?

It is not enough to say "Look what Germany or Norway did and see how prosperous and happy they are -- if only we did the same!"

Are you sure there aren't a couple dozen other countries that did the same things and whose economy is in the tank even worse than the U.S.? How do you know Greece didn't do the same? or Spain or Ireland? Doesn't Greece also have strong labor unions? So why is Greece not the same economic paradise that Germany allegedly is?

I would like to hear an explanation why CEOs are able to secure such extreme compensation levels, disproportionate to their performance -- how these positions are not more contested so there could be more competition for them and the compensation demands reduced by competitive bidding. What is the corporate culture that prevents merit from playing a role in selecting from among the candidates?

This is the kind of income-inequality discussion that should take place, rather than mere whining about the wide income gap and clamoring for the usual labor union snake-oil schemes such as protectionism and other measures that drive up the cost of production and hammer the consumers.

We need remedies that would improve the living standard for everyone (or at least everyone below the top 10% or so), not just increase wages for a million or so factory workers and in turn drive up prices to 300 million consumers, or increase benefits to select "needy" victims of the bad times, which everyone else has to pay for.

Subsidizing certain select high-profile victim groups by hammering down others who have to pay for it is no solution to anything.